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Spotify on Google, Apple Entering Digital Radio Market: Bring It On



Brian Benedik
Vice President, North America Advertising
Spotify

The digital radio landscape is becoming increasingly competitive, with new players like Apple entering the space and existing ones such as Spotify and Pandora continually looking for ways to stand out. Brian Benedik, vice president of North America advertising at Spotify, spoke with eMarketer’s Rimma Kats about the importance of data and why the intensified competition is not such a bad thing.

eMarketer: How are listening habits evolving?

Brian Benedik: The digital space in general, particularly the online audio space, has become a mobile-first environment. As new players come into this space—like iTunes Radio—the market is changing a bit.

Spotify, which started as a predominantly desktop-driven product, expanded to mobile. We are finding every day that more of our consumers are using Spotify via a tablet or smartphone, and in 2014 that trend is only going to accelerate.

eMarketer: How are marketers integrating their brand into your platform?

Benedik: In a lot of ways. One is through our media units, so we’ve got audio ad units that surface no more than 2 minutes an hour per user. We’re very careful with how many audio ad units we are serving to our users. We also have visual ad units in the form of display inventory, such as leaderboards, and we’ve got homepage takeovers that we’re activating on a daily basis. So there’s that general media unit that a lot of our clients will use for different initiatives.

We also have more custom applications. We have an open API [application programming interface] that allows brands to build custom experiences on top of our platform: Reebok and The Coca-Cola Co. have literally built a branded application within Spotify that took their initiatives and music and blended that together.

Reebok built something called a FitList app—which lives within the Spotify platform—where if you have a workout, and let’s say you wanted to listen to music during your workout, it allows you to do so through this Reebok FitList app. It sets the amount of time you want your workout to be, and it allows you to pick specific artists. It’s taking the playground of music that is Spotify, marrying that with a brand initiative the way Reebok has, and introducing to the consumer a pretty innovative execution.

“We’re working with brands in a lot of different ways outside of just general media units. That’s what seems to be getting a lot of traction recently.”

We also have something called brand pages that we’re rolling out, where a brand can have an evergreen presence on Spotify, similar to what an artist can do. Let’s say you’re following Jay-Z or Justin Timberlake: You’ll get notifications when any of those artists release a new album or a new track. The same thing applies to brands.

Coca-Cola, which has a well-defined music identity as a brand, has a brand page. They’ve created playlists for their different brands that live on the Spotify platform through a profile page, and they’re really able to message the consumers through music without it being an overt ad. We’re working with brands in a lot of different ways outside of just general media units. That’s what seems to be getting a lot of traction recently.

eMarketer: How are you using Big Data to track usage patterns, and what is the business value of this data?

Benedik: We collect a ton of data at Spotify, not just the registration data like gender, ZIP code and birth date. We know where you are, we know who you are in terms of age, we know your gender, and I think we’re getting better at analyzing listening patterns and behavior.

Last summer we analyzed all of the playlists on the Spotify platform that had the word “barbecue” in it, and we realized there were about 500,000 playlists with “barbecue” in it. What we saw, sort of intuitively, is every Saturday, these barbecue-based playlists would spike in listenership, because we found that folks were either hosting a barbecue or going to a barbecue, so we saw an edit to these barbecue playlists happening all the time.

What’s interesting about that is knowing that we’ve got these 500,000 playlists, knowing that we can infer that these folks are having a barbecue, we can talk to brands about that and see how we can properly message these folks with the appropriate brands [relating to] barbecues on Saturdays.

eMarketer: Over the past year, competition in the digital radio space has intensified. How are you meeting these competitive challenges?

Benedik: To be honest with you, we think this is just good overall because it’s going to lift all boats. I think it gives the streaming audio space a higher profile. 2013 was the first year where downloads actually declined, but the streaming audio usage kept accelerating, so there’s clearly something going on. There are big players that came into the space, like Google and Apple, and then there’s Pandora, who’s big in the space.

Our position is on-demand music, and we’re very focused on the socially active millennial and this ability to discover and share music. That’s a position that Spotify owns. The new iTunes Radio service is great, but very Pandora-like—that’s not really what Spotify does. I think that’s what Pandora owns.

“2013 was the first year where downloads actually declined, but the streaming audio usage kept accelerating.”

Regardless of the specific players, we’ve learned a lot, and we’ve sort of set the bar. We’ve worked with the labels very closely on the appropriate licensing arrangements. We know that the space has gotten very hot, and we’re expecting a lot of folks to come in—both the big players and the small players—and we feel we’re ready.

eMarketer: What’s next for Spotify in 2014?

Benedik: We know that music enthusiasts have moved to a mobile-first environment—that’s not to say that desktops and PCs are dead, but we know that most of the growth is coming from mobile. That’s what consumers have told us. So the fact that we’ve introduced this new mobile-free product, which essentially allows you to take your playlist with you for free on your smartphone, is really exciting.

We’re making a huge pivot to being a mobile-first company, and that includes tablets. Even in the first month since we made the announcement of this new mobile product, we have seen a dramatic increase in audience in the US and around the globe.

We are also looking at millennials. How do we hyperfocus on that 18-to-34 age segment, who we know is socially active and loves music and tends to be early adopters? We’re continuing to get traction in that community.

Finally, it’s all about data. We have so much data that we’re collecting, and we’re just trying to get better at how we package it and analyze it—not only for brands, but also just for new products and new features that we want to introduce to the marketplace.

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